Ukraine Wants to Introduce Tax on Cryptocurrency

Published on06 Aug. 2018

Ukraine is steadily approaching cryptocurrency legalization. Yet, legal status means tax burden and ICO regulations. The members of 20 companies have been working together on the collective law project. It presupposes the introduction of 5% tax on crypto asset withdrawal from exchanges to fiat, informs LIGA.net.

Oleksii Mushak, a BPP (Block of Petro Poroshenko ) deputy, is responsible for the document. He reported that the project would be introduced to the parliament in September. 5% taxation is planned to be introduced temporally from 2019 to 2025. The tax will be imposed on the difference between the sale price of the token and the documented purchase price or mining price. Also, individuals will pay a military levy in the size of 1.5%. The operations between different cryptocurrencies won’t be taxed.

The state should not interfere in the work of crypto-oriented exchanges, but the exit to fiat or real sector and purchases must be fixed. 5% seems the most appropriate option. Basically, this is the price of income legalization from the work with cryptocurrencies,

- mentions Artem Afian, the Executive Partner of the legal company Yuskutum.

Due to Mushak’s words, the market members are positive about the project. The owner of one cryptocurrency exchange says that the rate, indicated in the project, is a compromise with the Verkhovna Rada tax committee.

I support zero tax, but the chances are zero as well,

- he specified.

Oleksii Mushak’s project presupposes that the National Commission on Securities and Stock Market will be the regulator of the cryptocurrency market. Its head Tymur Khromaiev has reported earlier that the institution prepared the conception of market regulation. According to the informational charts, the commission plans to control not only the cryptocurrency exchange licensing but also the ICO market.

The commission will be establishing the procedure and requirements to the ICO launching, - specified the press service of the institution.

At the moment, there are several problems with the unpredictable legal consequences of the cryptocurrency activities and protection of consumer rights on the market. Kostyantyn Yarmolenko, the head advisor of the E-Government Agency Ukraine, considers that the regulation of ICO by the National Commission on Securities is essential for the sake of investor protection and in no way for the regulation itself.

Oleksandr Momot, CEO of REMME, the ICO of which gathered around $18 mln in 24h in February, has an opposing opinion. He says that to stimulate the cryptocurrency space, one should announce the regulatory and tax holidays:

Our government doesn’t understand this. They are used to address the issue as is standard. But this industry is very subtle, even well-developed jurisdictions can hardly control it.

It is known that Belarus has legalized the cryptocurrency space at the end of last year. At the same time, the president Aleksandr Lukashenko signed up a decree by which he has exempted the whole industry from taxes until the year 2023.

Andrii Kolodiuk, the Executive Partner of the investment fund AVentures Capital, believes that the main cryptocurrency players with a good reputation should enter Ukrainian market not by the licenses but by the application procedure. I.e., such company just has to notify the state about the launching of its activity in Ukraine within the framework of internal rules.

Due to Kolodiuk words, two big cryptocurrency exchanges have already addressed the Ukrainian Venture Capital and Private Equity Association (UVCA). They are interested when the Ukrainian banks will be licensed to carry out the exchange operations between fiat currencies and cryptocurrencies.